Vietnam province galvanized by $15-billion steel project

By Toan Dao   August 24, 2016 | 08:37 pm PT
The local steel firm is owned by Vietnam’s eleventh richest person.

Local privately-owned Hoa Sen Group and Ninh Thuan's provincial government are expected to sign a strategic partnership agreement under which the steelmaker will invest in a number of large-scale projects in the province, Dau Tu (Investment) Online reported on Wednesday.

The deal, to be signed at the Ninh Thuan 2016 Investment Promotion Conference on August 27, will map out investment of nearly $15 billion for an integrated complex centering on a $10.6 billion steel plant in the coastal province.

The complex will be built in five phases, and have a total capacity of up to 16 million tons per year.

Currently, the notorious Ha Tinh Formosa Steel Plant built by Taiwan's Formosa Plastics in the central province of Ha Tinh is the largest steel project in Vietnam. Formosa plans to invest $10 billion in the first phase of its plant that will turn out 7 million tons per year. It is also looking at a further $10 billion for the second phase of construction that would raise the plant's crude steel capacity to around 22 million tons per year. The company is currently carrying out trial runs at the plant.

Hoa Sen Group plans to spend another $400 million to build the Hoa Sen Ca Na Industrial Park where the steel project will be located, $800 million to set up an international port in the area, and various other projects such as cement plants and thermal power projects, the daily said.

The two sides plan to set up an economic development committee with leaders from Ninh Thuan's government and Hoa Sen to realize their strategic partnership.

The new partnership pact will replace an agreement signed in October last year under which Hoa Sen pledged to invest $3.8 billion to build a 6 million tons/year steel plant and other supporting projects in the province.

In 2008, Ninh Thuan granted permission for a joint venture between Vietnam’s Vinashin and Malaysia’s Lion Group to build an integrated steel complex, worth $9.8 billion, in the province’s Ca Na Industrial Park. But the province ended up revoking the investment license in 2011 following the withdrawal of the Malaysian investor.

Ninh Thuan is situated in the southern central coast of Vietnam, about 350 km from Ho Chi Minh City and 60 km from Cam Ranh International Airport in Khanh Hoa Province. Its coast line along the East Sea, internationally known as South China Sea, stretches 105km, according to the Ninh Thuan People’s Committee website.

The Vietnamese government has selected Ninh Thuan to build the country’s first and second nuclear power plants. Work on the first project has been put back to 2028, instead of 2020.

Hoa Sen Group was founded by Le Phuoc Vu in August 2001 and is headquartered in the southern province of Binh Duong. The company was listed on the Ho Chi Minh Stock Exchange in 2008. At present, Hoa Sen has nearly 6,600 employees, eight steel plants and 200 wholesale and retail outlets across the country.


Le Phuoc Vu (C) in a meeting with Ninh Thuan's provincial government in October 2015. Photo from the website of Ninh Thuan People's Committee

The group made revenue of VND17.7 trillion ($793 million), net profit of VND650 billion and production capacity of 1.2 million tons of steel sheet in the 2014-2015 financial year (October 1, 2014 to September 30, 2015). It is aiming to raise revenue to $1.5 billion and production capacity to 2 million tons/year in 2017.

Le Phuoc Vu was the eleventh richest person on Vietnam's stock market in 2015, with total assets worth VND1.383 trillion (around $62 million).

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